Monthly Archives: February 2020

What do falling mortgage rates mean for you?

At the start of February, mortgage interest rates dropped to their lowest since 2016.1 Most people know this is good news, but not everyone understands exactly how it may affect them. Here’s a short explanation of the two big ways you may be able to benefit from falling mortgage rates.

Benefit 1: you may qualify for lower payments on a new mortgage

Whether you’re buying a new home or refinancing a current one, the lower your interest rate, the lower your monthly mortgage payment (all other factors equal).

For example, on a mortgage for $200,000, an interest rate of 4.5% (4.643% APR2) would equal a monthly principal and interest payment of $1,013, while a lower interest rate of 3.5% (3.635% APR2) would equal a lower payment of $898.

That’s a savings of $115 a month – or $41,400 over 30 years! The bigger the loan amount and the bigger the difference in rates, the bigger the potential savings.

Benefit 2: you may be able to afford a bigger loan and more home

The lower the interest rate on a new mortgage, the larger the loan you can afford (all other factors equal, once again). For example, a $200,000 mortgage with a rate of 4.5% (4.643% APR2) would have a monthly principal and interest payment that is about the same as a $225,000 mortgage with a rate of 3.5% (3.620% APR2).

Therefore, falling mortgage rates may allow you to buy a bigger home without increasing your monthly payment. The more rates drop, the bigger this benefit may be.

What this means for homebuying

If you’re planning to buy a new home, you picked a very fortunate time to do so. To ensure you can take advantage of today’s low rates, you need to lock in a rate with your lender in case rates increase later. At Draper and Kramer Mortgage Corp., we can lock your rate up to 90 days before your closing if you’re shopping for a home and up to 360 days before closing if you’ve already picked a specific property.

What this means for home refinancing

If you’re planning to stay in your home, it may be worthwhile to refinance your current mortgage. This may allow you to lower your interest rate and monthly payment and take advantage of other benefits such as removing mortgage insurance, getting out of an adjustable-rate loan or taking cash out for college, renovations or other expenses. However, you should weigh these benefits against the closing costs that come with refinancing your loan.

Your next steps

If you’re interested in learning what rate, loan amount and monthly payment you qualify for, get in touch to schedule a free mortgage consultation.

When refinancing an existing loan, total finance charges may be higher over the life of the new loan.

1 Based on the 30-year fixed-rate mortgage average as of February 6, 2020. Source: https://fred.stlouisfed.org/graph/?g=NUh

2 Annual Percentage Rate

Tips for making your home pet-friendly

An estimated 67% of U.S. households are home to one or more pets. These animals bring a special joy to many homes, but they also bring unique needs. If you have a pet or plan to get one, here are some ways you can make your home more pet-friendly.

Create a special spot

Pets, like people, enjoy having a place that’s truly their own. Provide them with just such a space by designating a spot in your home that’s just for them. You may wish to include a bed, a blanket, a few toys or whatever other amenities your pet loves.

Pet-proof your home

Failing to properly “pet-proof” your residence can be harmful for your pet and your home alike. Secure anything that could injure your pet or that your pet could damage, including garbage cans, cleaning products, pet-toxic plants and fragile or unstable objects. It may be best to limit your pet to certain areas of your home by closing doors or installing gates.

Protect your furniture

If your pet sheds or chews or is accident-prone, you may need to protect your furniture. Consider pieces with easy-to-clean materials like leather or microfiber, or purchase furniture covers to protect your upholstery. Choosing materials that match the color of your pet’s fur can help hide shedding. Furniture with bare wood may be a poor choice if your pet loves to chew.

Choose the right flooring

Pets can be tough on your floors, which is why it is a good idea to be mindful of your flooring choices. Hard floors such as tile, hardwood or laminate are often best for pets because it is easy to clean up fur and accidents from these surfaces. Just make sure your pet’s claws won’t be liable to scratch your flooring of choice. If you prefer carpet, look into varieties with “pet-proof” qualities.

Secure your outdoor space

Protecting your pet from dangers outside your home is also important. Keep their outdoor area clear of any tools, chemicals or plants that could harm them. If your pet is prone to running away, a physical or “invisible” fence may be recommended to safely keep them in bounds.

For more tips on improving the wellbeing of your pets, check out our post on smart home devices for pets.

6 first-time homebuyer mistakes to avoid

Experience may be the best teacher, but when it comes to buying a home, it’s better to do things right the first time. If you’re planning to purchase your first place, here are six common first-time homebuyer mistakes that you should avoid.

1. Going it alone

When it comes to buying a home, every property and neighborhood is unique, and so are you when it comes to your situation, needs and goals. To help ensure you get the information, advice and solutions that are right for you, you should work with a trusted real estate agent and loan officer. Consulting with these professionals shouldn’t cost you a thing, so don’t be afraid to seek their guidance early and ask every question you have.

2. Not checking your credit scores and reports

Your credit can have a big impact on the cost and terms of your home financing. When you get preapproved or apply for a loan, your loan officer will examine your credit, but it’s also wise to monitor your credit on your own, especially if you’re planning to purchase a home. Click here to learn about checking your credit scores, and click here to learn about checking your credit reports.

3. Waiting to get preapproved

Getting preapproved for a mortgage should be one of your first steps once you’re serious about buying a home. This quick, easy and free step will show you how much home financing you can obtain, how much home you can buy and how much you can expect to pay for your monthly mortgage payment. Most real estate agents and home sellers will require you to be preapproved before you make an offer to buy a home. At Draper and Kramer Mortgage, we can typically preapprove someone the same day either over the phone or online.

4. Not preparing for some ups and downs

Buying a home is an exciting time and a major life event. It can and should be a fun process, but you should also expect some bumps and surprises along the way. Keep an open mind and prepare to be flexible. By setting your expectations appropriately, you’ll be more likely to enjoy your homebuying journey and make savvy decisions along the way.

5. Forgetting to budget for your purchase

Buying a home doesn’t always require a lot of cash. However, you should make sure you have enough funds for your purchase. Generally, you can expect to pay 0% to 20% of the home’s price as a down payment and 2% to 5% of the price in closing costs, although special mortgage programs may allow you to reduce these amounts. Speak with your loan officer and real estate agent to determine just how much cash you need for your homebuying plans.

6. Skipping the home inspection

You should always have a home inspected before buying it, even if the home is brand new. Don’t skip this critical step just because you’re in a hurry to buy or want to save the cost of hiring a home inspector. Having a home inspected gives you a much better chance at catching hidden and costly issues with the home before you make your purchase. If your inspector discovers any problems, you can ask the seller to fix the issues, request a credit on your purchase or walk away from the deal.

Conclusion By looking out for these common mistakes, and by working with a trusted real estate agent and loan officer, you’ll be well on your way to a rewarding home purchase. If you or someone you know would like to get preapproved for a home loan, we’re here to help!

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